World silver prices have just had a strong increase session, leading the upward momentum of the precious metal market. At the time of update (8:50 AM on August 5 - Vietnam time), spot silver prices were traded around 59.7 USD/ounce.
At the same time, spot gold prices rose sharply to the threshold of 4,903 USD/ounce. The positive developments of gold and silver were supported by the drop in oil prices and the cooling down of US government bond yields.
Oil prices fall in support of gold and silver
The focus of the market continues to be the situation in the Strait of Hormuz and relations between the US and Iran. Expectations of short-term oil supply disruption have fallen, causing energy prices to plummet. Brent oil prices fell 5.3%, to about 79.36 USD/barrel. US WTI oil prices fell 5.7%, to 75.77 USD/barrel.
The drop in oil prices contributed to easing inflation concerns, supporting the bond market and pulling yields down. This is a beneficial factor for gold and silver, as precious metals do not bring fixed yields.
The yield on US government bonds with a 2-year term fluctuates around 4.20%, while the yield on 10-year terms is around 4.62-4.64%. The USD index is almost flat, maintaining around the threshold of 100 points.
However, the easing of geopolitical tensions also made safe-haven demand for gold not increase too strongly. This explains why silver recorded a superior increase compared to gold in the session.
Fed policy still puts pressure
The precious metals market is still affected by the inconsistent policy signals of the US Federal Reserve (Fed).
At the meeting on July 29, the Fed kept the operating interest rate unchanged in the range of 3.50-3.75%, with a vote of 9 votes in favor and 3 votes against. The message after the meeting showed that the agency did not want to give a clear direction on the upcoming policy roadmap.
US July manufacturing data continues to show the economy maintaining growth momentum. The ISM Manufacturing Purchasing Managers' Index reached 55.6 points, higher than the 53.3 points of June. This increases the possibility that price pressure may continue to exist.
Meanwhile, the recruitment demand report shows that the number of vacancies in the US is almost unchanged, at 7.4 million. The recruitment rate reached 4.4%, showing that the labor market has shown some softer signals.
The combination of falling oil prices and cooling employment data helps limit expectations that the Fed will have to implement many waves of interest rate hikes. However, the possibility of monetary policy continuing to be maintained in a tightening direction is still a factor that can limit the upward momentum of precious metals.
Technically, gold prices are facing the first resistance zone at 4,100 USD/ounce. If it surpasses the 4,180-4,200 USD/ounce zone, the price may head towards the 4,350 USD/ounce mark. Conversely, the near support zone is at 4,020-4,040 USD/ounce.
For silver, the nearest resistance level is 60 USD/ounce, followed by the 61-62 USD/ounce zone. If it crosses this area, silver prices may head towards the 50-day moving average at 62.91 USD/ounce and the 65-66 USD/ounce zone. Notable support levels are at 57 USD and 56 USD/ounce.
Update on domestic silver prices morning of August 5th
The article only provides information about the developments of the world gold and silver market, not investment recommendations.
